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Superman

Is the war still all about the oil?

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A year or so ago, certain folks on this very board were convinced the war in Iraq was all about oil. Well I just paid $2 per gallon for some gasoline. You'd think the petrol flood gates would open up after the US took control of Iraq, thus dropping prices significantly, but I don't see it happening. As a matter of fact, I see the opposite happening. Discuss.

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Perhaps cheap is relative. Keeping the supply lines open and the cost under $5/gal might have been what it's all about.

 

Gas is cheaper than bottled water even at $2/gal.

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That's irrelevant. If the US were getting millions of gallons of oil out of Iraq and selling in the USA, then gas prices would drop. Econ 101.

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Here's an interesting article from the Wall Street Journal:

COMMENTARY

 

Saddam's Global Payroll

 

By THERESE RAPHAEL

 

On Dec. 5, during a trip to Baghdad, Claude Hankes-Drielsma faxed an urgent letter to U.N. Secretary-General Kofi Annan. Mr. Hankes-Drielsma, the U.K. Chairman of Roland Berger Strategy Consultants, had recently been appointed to advise the Iraqi Governing Council. What he saw in Baghdad left him shocked. "As a result of my findings here, combined with earlier information," he wrote, "I most strongly urge the U.N. to consider appointing an independent commission to review and investigate the 'Oil for Food Programme.' Failure to do so might bring into question the U.N.'s credibility and the public's perception of it. . . . My belief is that serious transgressions have taken place and may still be taking place." Just how serious these transgressions were became clear late last month, when the Iraqi daily Al Mada published a partial list of names, compiled by Iraq's oil ministry, of those whom Saddam Hussein rewarded with allocations of Iraqi oil. Mr. Hankes-Drielsma, who says he was among the first to see the list in early December, says it is based on numerous contracts and other detailed documents and was compiled at the request of the Iraqi Governing Council. The list, a copy of which has been seen by the Journal's editorial page, is in spreadsheet format and details (in Arabic) individuals, companies and organizations, grouped by country, who oil ministry and Governing Council officials believe received vouchers from the Iraqi regime for the purchase of oil under the oil-for-food program. Mr. Hankes-Drielsma said the recipients would have been given allocations at below-market prices and then been able to pocket the difference when a middleman sold the oil on to a refinery; 13 time periods are designated and with indications of how much crude, in millions of barrels, each recipient allegedly received. The list reads like an official registry of Friends of Saddam across some 50 countries. It's clear where his best, best friends were. There are 11 entries under France (totaling 150.8 million barrels of crude), 14 names under Syria (totaling 116.9 million barrels) and four pages detailing Russian recipients, with voucher allocations of over one billion barrels. Many of the names, transliterated phonetically from Arabic, are not well-known or are difficult to identify from the information given. Others stand out. There's George Galloway, the Saddam-supporting British MP recently expelled from the Labour Party, who has always denied receiving any form of payment from Saddam. Other notables include Indonesian President Megawati Sukarnoputri (also listed separately as the "daughter of President Sukarno"), the PLO, the Popular Front for the Liberation of Palestine, the Russian Orthodox Church, the "director of the Russian President's office" and former French Interior Minister Charles Pasqua. Some -- including Mr. Pasqua, the Russian Church and Ms. Megawati -- have denied receiving anything from Saddam. Patrick Maugein, a close friend of Jacques Chirac and head of Soco International oil company, says his dealings were all within "the framework of the oil-for-food program and there was nothing illegal about it."

 

His program....

 

The list's breadth, and the difficulty in reading and interpreting it, has slowed its exposure. There's also the question of authentication. Mr. Hankes-Drielsma (who is not an Arabic speaker) is convinced it is authentic and will be followed by more detailed evidence as the Iraqi oil ministry and Governing Council conduct further investigations. "I've seen the documents that have satisfied me beyond any doubt that we're dealing with a genuine situation," he told me. One of the most eye-catching names on the list is easy to miss as it's the sole entry under a country one would not normally associate with Iraq -- Panama. The entry says: "Mr. Sevan." That's the same name as that of the U.N. Assistant Secretary-General Benon V. Sevan, a Cyprus-born, New York-educated career U.N. officer who was tapped by Kofi Annan in October 1997 to run the oil-for-food program. When I tried Mr. Sevan for comment, a U.N. spokesman wouldn't put me through to him directly but offered to pass on emailed questions. In an email reply to questions about Mr. Sevan's apparent inclusion on the list and interest in the Panama-based business that allegedly received the discounted oil, the spokesman quoted Kofi Annan's statement Friday: "As far as I know, nobody in the Secretariat has committed any wrongdoing. If there is evidence, we would investigate it very seriously, and I want those who are making the charges to give the material they have to me so that we can follow up to determine if there has been any wrongdoing and I would take necessary action. So far statements are being made but we need to get facts." The pro forma U.N. response certainly seems inadequate. Mr. Sevan should take the opportunity to defend himself against the inference that the presence of his name on this list could help explain how Saddam was able to get by with so much influence-buying around the world with little apparent objection from the U.N. * * * In the seven years that Oil-for-Food was operational, (it was shut down in November and its obligations are being wound up) Saddam was able to skim off funds for his personal use, while at the same time doing favors for those who supported the lifting of sanctions, supplied him with his vast arsenal of weapons, and opposed military action in Iraq. Indeed, it was clear from the outset that Saddam would be able to use the program to benefit his friends. The 1995 U.N. resolution setting out the program -- Resolution 986 -- bends over backwards to reassure Iraq that Oil-for-Food would not "infringe the sovereignty or territorial integrity" of Iraq. And to that end it gave Saddam power to decide on trading partners. "A contract for the purchase of petroleum and petroleum products will only be considered for approval if it has been endorsed by the Government of Iraq," states the program's procedures. Predictably, Saddam exploited the program for influence-buying and kickbacks, and filled his coffers by smuggling oil through Syria and elsewhere. With Oil-for-Food and smuggling, he was able to sustain his domestic power base and maintain a lavish lifestyle for his inner circle.

 

...and his oil.

 

The system was ripe for abuse, in part because a divided Security Council gave Saddam far too much flexibility within the program. Oil-for-Food not only gave Iraq the power to decide with whom to deal, but also freedom to determine the official price of Iraqi oil, revenues from which went legally into the U.N.'s Oil-for-Food account. U.N. rules did not allow it to order Iraq to deal directly with end-users and bypass all those lucky middlemen who got deals from Saddam. Nor was the U.N. allowed to view contracts other than those between the oil ministry and the first purchaser, so it had no way of verifying that surcharges were being imposed by the middlemen on end-users. That enabled him to add surcharges to finance his own schemes while still making the final price competitive. U.N. rules were ostensibly devised to prevent pricing abuses, but in one of the many indications of administrative failure, those safeguards appear not to have been enforced. In response, the U.S. and Britain tried often from 2001 to impose stricter financial standards, but Russia blocked changes. Then the U.S. and Britain instituted a system of retroactive pricing -- delaying approval of the Iraqi selling price so that they could take account of the market price when giving their approval. This too met with grumbling from Friends of Saddam and while it reduced oil exports, it didn't end the corruption. Throughout most of the program's life, Mr. Sevan's office seemed to see no evil. When overwhelming evidence finally surfaced that Oil-for-Food had become a gravy-train for the Iraqi regime, U.N. officials acknowledged some of the abuses but refused any of the blame. Criticism is routinely portrayed as politically motivated. "The [program] has existed in a highly politicized environment from day one," explains the U.N. Web site. "The scale of these operations has also made it a rather large target." Its last line of defense was to punt to the Security Council, whose sanctions committee (authorized by the 1990 sanctions resolution and composed of Council members) was meant to oversee the program, receive reports and review audits. The record of systemic abuse of the program lends credence to claims that the oil ministry list is genuine and should be investigated. The Iraqi Governing Council says it's considering legal action against anyone found to have profited illegally from Oil-for-Food. The U.S. Treasury's Bureau of Immigration and Customs Enforcement is investigating possible violations of U.S. law. But the U.N. has resisted calls for an independent investigation into abuses. Says Mr. Hankes-Drielsma: "I would urge the U.N. to take the high moral ground and instigate a truly independent investigation." To this end, he wrote a second letter to the U.N. secretariat on Feb. 1, this time addressed to Hans Correll, Under Secretary for Legal Affairs and Legal Counsel of the U.N., with a copy to British Foreign Secretary Jack Straw. He catalogs questions on areas "which need urgent investigation," e.g. "Why did the U.N. approve oil contracts to non-end users?" His letter alleges that "not less than 10% was added to the value of all invoices to provide cash to Saddam . . . why was this not identified and prevented?" The letter also asks "What controls were in place to monitor BNP [the French bank] who handled the bulk of the LCs, the total value of which may have [been] in the region of $47 billion?" In a June 2000 statement on Oil-for-Food, Mr. Sevan said, "As [Mr. Annan] put it recently, we, as international civil servants, take our marching orders from the Security Council." It might have been more accurate to acknowledge the U.N. took its marching orders from Saddam. Ms. Raphael is editorial page editor of The Wall Street Journal Europe.

 

Updated February 9, 2004

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Absolutely. Pave that shithole and make it the world's largest gas station. evils3d.gif

 

Oh yeah, what about the folks living there? They aren't using the oil anyway, so let's take it from them.

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I don't think it was about CHEAP oil, I think it was about CONTROLLING the oil.

 

U.S. oil production peaked in 1970; North Sea production peaked in 2000; every major oil province in the world is in irreversible decline, except for the Middle East. The Middle East countries have been the "swing producers." That is, whenever more oil has been needed to meet world demand, the Saudis could be relied upon to pump a little more because they were assumed to have the great infinite reservoir of oil. Now, if we stop to think clearly about that rather amusing notion for a moment, we will realize that, on a finite planet, there are only limited amounts of everything. So there must be an end to the oil sometime.

--source

 

oil production in 42 countries (graphs)

 

Other links on peak oil:

1

2

3

4

 

K. Maybe I'm pushing the doomsday scenairo, but worth a look since hydrocarbons are what drives the global economic engine.

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Absolutely. Pave that shithole and make it the world's largest gas station. evils3d.gif

 

Oh yeah, what about the folks living there? They aren't using the oil anyway, so let's take it from them.

 

I'm not sure you're addressing the question. The question is, "Is the war still all about the oil?". Your rebuttal seems rhetorical. It's a given that we control Iraq's oil fields as a result of the US taking control of Iraq. Merely by the US taking control of the physical region of the earth known as "Iraq", we take control of the oil that flows underneath its soil (and all the sand, and water, etc). But that doesn't prove that the war is all about oil. As a matter of fact, it doesn't even address that question.

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controlling oil, the most important natural resource to world economy, has underlined middle east policies for the better part of the 20th century. is there any indication that anything has changed?

 

on the contrary all indices point to the increasing importance of controlling supply: oil is a dwindling resource, developing nations have skyrocketing needs, and we have not developed technlogies to deal with shortage.

 

the long term trend of pump prices is up. no matter what.

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Isn't anyone going to comment on my article? cry.gif

 

I think the article is a very interesting read. I even said that at one point, but can no longer find the post??!

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That's irrelevant. If the US were getting millions of gallons of oil out of Iraq and selling in the USA, then gas prices would drop. Econ 101.

 

Yes, I remember Econ 101. Rather like learning anatomy by studying a GI Joe.

 

1. There's no oil coming out of Iraq yet, and it sounds like there won't be for a while.

 

2. prices rise and fall according to expectations, not just current conditions. Remember Gulf War I? The day the bombing started, the prices started to drop at the gas stations, even though amount of oil immediately available dropped.

 

3. The world oil supply is controlled largely by a cartel. Our reliable allies in Saudi Arabia decide how much oil is in the world market. And gasoline supply is controlled by the domestic refineries. It's certainly not in Chevron's interest for gas prices to drop.

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That's irrelevant. If the US were getting millions of gallons of oil out of Iraq and selling in the USA, then gas prices would drop. Econ 101.

 

Yes, I remember Econ 101. It's certainly not in Chevron's interest for gas prices to drop.

Remember Econ 101? That's not necessarily true. Depends on the elasticity of the market. wave.gif

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Hey 'tards, maybe this had something to do with the escalating price?

 

Opec production cut reveals cartel's new goal

 

February 11, 2004

 

Algiers - Opec's surprise cut in production shows that the powerful cartel is all business in the post-Iraq-war-world, navigating for maximum profit rather than trying to accommodate the United States, analysts said.

 

"This is not your Daddy's Opec," analyst Yasser Elguindi told AFP Wednesday, referring to the price-driven decision by the Organization of Petroleum Exporting Countries to cut production announced in Algiers Tuesday.

 

During the Iraq war Opec raised production in order to keep prices from shooting up. But Elguindi said the goal of the 11-nation cartel, which supplies over a third of the world's oil, was now "to get the highest price possible while still maintaining world economic growth."

 

The Opec meeting in Algiers "was all about messages, all about intent, that the cartel is going to defend prices," said Elguindi, who works at Medley Global Advisors in London and attended the conference here.

 

Opec surprised oil markets Tuesday by announcing it would be producing 2.5 million fewer barrels per day (bpd) of crude as of April 1 in an effort to keep prices from falling when demand drops in spring in the northern hemisphere.

 

Traders had expected Opec to wait until spring to announce any cuts as prices are still above Opec's target band of 22-28 dollars a barrel and demand is still high owing to an exceptionally cold winter in the United States and Europe.

 

But Opec members said after a meeting in Algiers that they were reducing the cartel's "24.5 million bpd ceiling by one million bpd to 23.5 million bpd, effective April 1," according to a joint statement.

 

In addition, production over this quota that had been stimulated by high demand is to be eliminated by the end of March, with the excess estimated at 1.5 million bpd, Opec ministers said.

 

Elguindi said Opec was now pro-active and trying to get ahead of prices.

 

Opec had been more passive after negative Western reaction to the oil shocks, and flaring of prices, in the 1970s.

 

But Opec "doesn't want a repeat of 1998, when prices collapsed and took two years to come back," Elguindi said.

 

World oil prices spurted higher Tuesday but the shock was muted by scepticism over Opec's ability to carry out its decision, analysts said.

 

New York's benchmark contract, light sweet crude for delivery in March, gained $1.04 to $33.87 a barrel. Brent North Sea crude for March rose 93 cents to $30.04.

 

Buying was more relaxed than might be expected, said Fimat USA market analyst Mike Fitzpatrick in New York.

 

"The lack of buying comes from the scepticism over the Opec action," Fitzpatrick said. Traders apparently believed the cartel would find it difficult to trim output as it has traditionally produced over its quotas.

 

Meanwhile, Fitzpatrick said, the International Energy Agency was predicting a second-quarter supply surplus of 2.5 million to 4

million barrels per day, making any Opec tightening less painful.

 

"We hope producers do not take actions that hurt our economy," White House national security spokesman Sean McCormack told AFP after the Opec announcement.

 

"The United States believes oil prices should be set by market forces in order to ensure adequate supplies," said McCormack, who added: "We do not comment on specific Opec meetings or actions."

 

An analyst present in Algiers who wished to remain anonymous said that Opec could not cut output in March for political reasons since it would go over badly in the winter season in the United States and Europe.

 

The cartel nonetheless clearly intended with its two-step approach to micro-manage production and retain control over oil prices, the analyst said.

 

Opec ministers were also concerned about loss in value from the falling dollar, as oil prices are in the US currency.

 

Iranian Oil Minister Namdar Zangeneh said Opec was interested in keeping oil prices at the upper end of the cartel's official price band of 22-28 dollars for a reference basket of crudes.

 

The production cut was decided in order "to keep in the upper part of the band", which means stopping oil prices from falling below 25 dollars a barrel. - AFP

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Great article Cracked. Thanks for posting that.

 

I've said it before but it bears repeating, that I'm absolutely amazed that the folks who have accused anyone in power who supported invading Iraq of having only the basest motivations for doing so, but have remained stone-silent in the face of clear evidence that many of the leading figures who opposed removing Hussein by force were taking direct bribes from the regime, funded by profits that were taken directly out of the pockets of the Iraqi people. Amazing.

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